TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC

Is direct sale really a better model than dealerships?

As I see more and more complaints on this forum concerning pricing, trade-in, delivery and servicing, I am beginning to consider this issue.

The fact is, direct sale does not always deliver a better price and experience to customers compared to dealerships. If dealerships are in fact more efficient, then consumer surplus will be greater with dealerships.

Based on both personal experience and information I have read on this forum, Tesla's delivery and service experiences are sub-par. Service experience is particularly bad in busy locations with many owners. If this is the case now, then I can't even imagine what it will be like when Model 3 comes out and both the delivery and service needs are multiplied many folds.

Moreover, it's uncertain if customers even get the best pricing with a direct sales model. Operating stores are expensive and those costs need to be spread into the cars. If stores operate inefficiently, compared to a dealership, then they would actually cost more, be more risky for the company, and lead to higher car prices.

Overall in the past few years, my experiences at dealerships (mostly premium brands) have been great. Sales, delivery and serving have all been good. These are experts at doing what they do, while Tesla stores are not. I am beginning to think that they may be economically more efficient at doing what they do and dealership model may actually be better than company stores in maximizing consumer welfare.

My personal experience has been the exact opposite. The Tesla store and service center interactions have been excellent. On the flip side, trying to buy an electric car at a Nissan dealer was a maddening experience. I think you will find maybe 5-10% of people here might agree with you, but the rest will not.

As CmdrThor said, my experience with Tesla sales and service has been great as well. I have had only one minor problem with the car, but the service center handled it flawlessly. The sales experience was similarly informative, easy, and low pressure. I would not even compare it to any other experience with traditional car dealers. Hands down the best experience in that regard.

I don't know about the general population of Tesla owners, but you are generally more likely to find negative opinions on forums than in the general public about any issue. Again, just my opinion.

To me, there are so few options that can be selected (have you seen the online order for Porsche?) and on top of that, they give you 14 days to confirm your order! Anybody that complains about this system would probably complain about EVERY system.

One of my favorite parts about Tesla as a company is the omission of dealerships. I have purchased 4 vehicles new from dealers and each time was a pain.

You have to "play the game" in which both the buyer and the seller know that the "sticker price" isn't the lowest they are willing to sell you the vehicle, but unless you haggle your way down... that is the price you will pay. Two people can go into the same dealer, on the same day, at the same time, and buy the exact same vehicle at different prices.
Having your salesman say "Well let me go run that by my manager and see what we can do" is so stupid its offensive to me. I always begin my conversation with "please don't waste my time, lets just cut out all the haggling and start where this will ultimately end up...at your best price."

If dealerships had more transparent and honest prices, sure..i would like that. If dealership salesmen were really on your side, trying to get you the best deal, that would be great.

The "dealership" model had its chance to represent the buyer and be on our side and they failed. Time for something new to get its chance.

Just bought a car by dealer method Thursday. There were ~300 models in the area to pick from. A few hours on the phone cut the list to 2 dealer with the right trimmed cars. Both claimed the same price.

Dealer 1 sucked, but we were not there long, 30 minutes max. Price went up when we actually arrived, we split, we don't haggle, ever.

Dealer 2 sucked, but we did not do our homework, it was a driveby stop on the way to the second dealer. Fail. True Aholes though out of the 1980's. Odd, I already bought 2 cars there in 2 years with flawless experiences. Our saleswoman was not there that day.

Dealer 3 was painless, professional, and EV friendly. Had the price down to $ and Cents, washed, charged, excellent prep, out of there in an hour.

Price payed for new 2017 with 6 mi with no haggling at all? 18% under MSRP before government programs. Finished price for a car with ACC, Lane Keep, Automatic Braking, auto parking, deluxe sound, Teen Driver Mode, Valet Mode, cool traffic-based NAV, XM, leather, etc, etc, after all the government programs it was the MSRP of a similarly equipped Camry or Prius. But with instant full power acceleration at all speed, and nimble handling, and better operational economy.

So it took a day, got exactly what I wanted, got a good price, and a well prepped car. They even had the HOV stickers right there and put the front plate and stickers on.

Note. Nobody hassled us about features, prices, or options. The whole thing took just over an hour due to the cleaning and top off charge.

Cliff Notes: Brick and Mortar Dealer shopping took a full day using 3 stops. In the end, smoking price, great service, nice car. Put 500 miles on it by Sunday. No issues with fit, finish, noise, prep, performance.

Note, if I do have an issue, it can be serviced 15 miles away. On the very rare service calls, fast, fair pricing, clean car.

DISCLAIMER - Your results may vary. Professional Car Nut. Do not try this at home. If you have an erection that lasts over 4 hours and poor eyesight, PLEASE use a condom.

I love Tesla model. I dread walking onto car lots. I believe one reason for success of CarMax is no bs salesman pressuring.

Tesla guys were always great. I went there about four times and test drive before pulling trigger, which was weird too, as its online.

After purchase Tesla was great, working with me with delivery. Even today my "salesman" is in my contacts. I update him on my car lol, sent pictures of full wrap and from first road trip. He's now managing his own store.

Tomorrow I'm taking my car down to service center for tire rotation at 5,000 miles. I made appointment TODAY. I'm expecting more of the same from Tesla: paramount service, attentiveness, innovative approaches to an industry that badly needed updating, and finally, what Tesla is for me: plenty of wow-factor.

My personal experience has led me to direct sales being far superior.
I've had a mix of good, average, and awful dealer experiences.

My family has bought 5 Tesla's of varying models. The delivery and service has been far superior overall. Yes, delivery is faster at a dealer, but the ease of the purchase, the lack of any over aggressive sales reps or worse yet, con men, is well worth the time.

And guess what, the dealers associations also believe direct sales is a superior model.
If they didn't, they wouldn't be fighting Tesla so hard and trying to make it illegal.

Does Tesla have challenges? Absolutely. But most of those are not because of the direct sales model, they are because they are growing incredibly fast.
If GM or Toyota bought out all their dealers they would have a much easier time building sales and service locations.

Not that anyone on this forum will use dealerships, but if you do, tips:

If they cannot give you a dollar and cents Out The Door price over the email or phone, skip them.
If you arrive and the price is not what was promised, leave immediately. They will try to game you.
If somebody EVER asks you "how much can you afford", leave immediately. You are the buyer, they are not your dad. This is a stale sales method taught to all car salespeople. Part of the system is to keep you waiting deliberately, then switch to a "closer". Leave before that point.

You have the money, they have the car. You have all the power, they have none. You are their boss, fire them when they misbehave.

Service and sales are two seprate things. Having direct sales is great, having only company owned service centers is awful.

Tesla doesn't have a monopoly on selling cars, so they have great incentives to make the sales experience pleasant and efficient. Traditional dealers range from awful to great, but with Tesla you will consistently get very good. The no haggling and one price for all thing has clearly gone out the window lately, but still being able to order online without having to waste your time at a dealership is great.

Tesla does have a monopoly on servicing your car, and therefore have little incentive to make it efficient. We pay a fortune to service our cars and are at the whim of Tesla on what things will cost or what they will do. With any other car if you don't like what the dealer chargers for service, you can go somewhere else.

There are good stearlerships and bad stealerships. When car shopping, I send out an email with all the information I want to the closest 5-7 stealerships, come in with the print out and leave with the car.

That being said, I prefer the Tesla method. Go online, configure, and you know the price instantly. I think they need to fix their service, but the buying method at Tesla is superior to even the good stealerships.

since I ordered my newest tesla online with only a phone call to a DS I'd have to say that the direct sales system is far superior to the traditional dealership format.
However where tesla is failing is in the area of service.
they are understaffed and housed in inadequate facilities and there is not enough geographical coverage.
This is where the dealership system is better, but it is better at a high cost to the consumers.

If tesla plans on adding sales of 500k cars a year they must upgrade their servicing capabilities. the long waits for simple service is intolerable and the lack of replacement parts in incomprehensible.

since I ordered my newest tesla online with only a phone call to a DS I'd have to say that the direct sales system is far superior to the traditional dealership format.
However where tesla is failing is in the area of service.
they are understaffed and housed in inadequate facilities and there is not enough geographical coverage.
This is where the dealership system is better, but it is better at a high cost to the consumers.

If Tesla plans on adding sales of 500k cars a year they must upgrade their servicing capabilities. the long waits for simple service is intolerable and the lack of replacement parts in incomprehensible.

Click to expand...

I mostly agree with this. It's incredibly difficult to maintain service quality in a very large organization, with effectively no competition. I think they need to find some way to authorize 3rd party service centers, granting them non-exclusive right to sell, deliver and service the vehicles. This would in no way limit Tesla's right to provide service or sell to the customer directly and in competition with the 3rd party service center.

At some point the "we do it all" model just becomes unwieldy and breaks down.

I have yet to experience direct sale from Tesla, but I can imagine it being a more peaceful experience than waling into a dealership. It almost seems as if dealerships have a reputation for giving you a hard time, therefore people are hesitant to go and "play a game." However, I do find it interesting that Tesla has stores and uses direct-sale techniques to draw in customers, change is good!

Meta

Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.